More than half of people whose paychecks will effectively be shrinking next month are not aware of it.

The reason for the changes to people's take-home wages is an increase in workplace pension contributions.

The automatic enrolment scheme has seen nine in 10 people staying in their workplace pension rather than opting out.

And for these people, from April 6, minimum contribution rates will increase from a 2% total including employee and staff contributions to a combined 5%, with a minimum of 2% from the employer and the remaining 3% from staff.

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Insurer Aegon said a survey of more than 700 people had found more than half (53%) were unaware of the imminent increase.

In April 2019, the rate will increase again, to 8%, with a minimum of 3% from the employer, leaving a 5% minimum staff contribution.

Minimum contributions are gradually being increased to help encourage people save enough for a comfortable retirement - but there have been concerns that some people may decide to drop out when rates increase.

A pay slip close up (Image: Getty Images)

But Aegon said workers should bear in mind that opting out means they will miss out on "free money" in the form of employers' contributions and tax relief.

Over time, their contributions plus this free money can grow to very substantial sums - and someone on average earnings who chooses not to join their workplace scheme at age 22 could potentially lose out on a fund of an estimated £450,000 by the time they reach 68, it said.

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Kate Smith, head of pensions at Aegon, said: "Raising awareness of the benefits ofpension saving is key to the success of an employee's financial future and we want to encourage employers to get across the value of workplace saving.

"The decision to opt out could end up costing workers up to £450,000 over their working lifetime, an enormous sum of money that would effectively be thrown away - why would anyone give up on money they're entitled to?"

Tom McPhail, head of policy at Hargreaves Lansdown, said typically someone needs to be saving around 12% to 15% of their monthly income throughout their working life to avoid a significant drop in their standard of living in retirement.

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He said: "The simple message for employees is keep saving for your retirement if you possibly can and save as much as you can."

Guy Opperman, Minister for Pensions and Financial Inclusion, said: "Staying in your workplace pension really is one of the best financial decisions you can make. By starting early you will find yourself in a much better position when you come to retire.

"Thanks to automatic enrolment, more than nine million people are newly saving or saving more into a workplace pension. With contributions set to rise people will find themselves with an even bigger pot in later life."